2018-01-21

QE Is Over: More Breakdowns in Utilities, Real Estate, 30-Year Bond

The key to it all is interest rates. Here's the 30-year ETF TLT. There's a small H&S pattern that has formed. If it completes, the target is around $112. That will break the trendline that goes back to 2006. Utilities and real estate are forecasting a break here, but the 30-year yield has to break to set off the market fireworks.

However if you prefer the U.S. Treasury futures, the break has already occurred:

A completion of the pattern would take US to 141, below the 36-year supporting trendline.

A break looks like it would be a tradable short-term rally. Whether it would represent the end of the bond bull market or the last move designed to make sure the maximum number of investors are crushed by the next bear market, remains an open question. The developed world and China are bugs in search of a windshields when it comes to debt levels. A rise in interest rates could be the catalyst for the biggest economic crisis since the Great Depression. Barring that, the global economy looks closer to the end than the beginning of the growth cycle.